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Macquarie Group Limited
ABN 94 122 169 279
No.1 Martin Place
Sydney NSW 2000
GPO Box 4294
Sydney NSW 1164
AUSTRALIA
Telephone (61 2) 8232 3333
Facsimile (61 2) 8232 7780
Internet http://www.macquarie.com.au
1 November 2013
Dear Shareholder
Please find enclosed a Notice of General Meeting of Macquarie Group Limited (Macquarie) which will be
held in the Conference Room, Level 1, 1 Shelley Street, Sydney, New South Wales on Thursday, 12
December 2013. The meeting is scheduled to commence at 2.30 pm and will also be webcast live
on Macquarie’s website at www.macquarie.com.au
The General Meeting is being held to approve a distribution of ASX listed Sydney Airport stapled
securities to Macquarie shareholders at the record date. If the distribution is approved, eligible Macquarie
ordinary shareholders will receive one fully paid Sydney Airport stapled security for each Macquarie
ordinary share held at the record date. This distribution will be implemented through a special dividend
and reduction of capital.
Macquarie Group holds approximately 17% of Sydney Airport which it has determined to distribute to
shareholders. With a strong balance sheet position and excess regulatory capital, Macquarie considers
that an in specie distribution is an equitable way to distribute the value in Sydney Airport to Macquarie
shareholders so that they can directly participate in ownership. Eligible Macquarie shareholders can
decide whether to maintain an ongoing investment in Sydney Airport based on their individual
circumstances.
It is also proposed to consolidate Macquarie shares through the conversion of one Macquarie ordinary
share into 0.9438 Macquarie ordinary shares to reflect the size of the reduction of capital (approximately
5.6 per cent of Macquarie’s market capitalisation based on current information). This will facilitate greater
comparability of share prices and financial metrics of Macquarie before and after the distribution.
The proposed distribution of Sydney Airport stapled securities will only occur if approved by Macquarie
shareholders along with a resolution to amend the constitution of Macquarie to facilitate the distribution.
The consolidation of Macquarie ordinary shares also requires the approval of Macquarie shareholders.
The Board recommends that you vote in favour of each of the resolutions to be considered at the
General Meeting.
The proposed resolutions are important and fully supported by your Board. If you are unable to attend
the meeting, we urge you to appoint a proxy to attend and vote on your behalf, either online using the
share registry’s website at www.investorvote.com.au or using the enclosed proxy form.
In order to have the Sydney Airport stapled securities registered in your name you will need to
complete and return the enclosed holder election form or complete the election online by 7.00 pm
on 6 January 2014 AEDT. If you do not complete your election by then your Sydney Airport stapled
securities will be initially registered in the name of a nominee on your behalf. I strongly encourage you to
complete and return the election form so that you can directly enjoy the benefit of investment in Sydney
Airport.
If you plan to attend the meeting, please bring the enclosed proxy form to facilitate your registration
which will commence at 1.30 pm. I look forward to seeing you then.
Yours faithfully
H Kevin McCann AM
Chairman
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Explanatory Memorandum
Key Dates
Last time and date to lodge voting forms (including proxy appointments) for the
General Meeting with Macquarie’s Share Registry
Time and date to determine eligibility to vote at the General Meeting
General Meeting
Last day for trading Macquarie Shares (ASX Code: MQG) on ASX with an entitlement
to the Distribution
Last day for trading Macquarie Shares on a pre-Consolidation basis
Macquarie Shares commence trading on ASX without an entitlement to the
Distribution of SYD Securities (“ex-Distribution”), and on a Consolidated basis (i.e. with
a reduced number of shares) with deferred settlement
Last date for registration of transfers of Macquarie Shares on a pre-Consolidation
basis
Record Date for determining entitlements to SYD Securities (on a pre-Consolidation
basis) (“Record Date”).
Holding statements for Consolidated Macquarie Shares despatched
Deferred settlement trading of Macquarie Shares ends
Normal trading of Macquarie Shares resumes
Last date (“Election Date”) for receipt of:
1. Holder Election Forms to have SYD Securities registered in your name; and
2. Sale Facility Election Forms to participate in the Sale Facility.
Settlement of all deferred settlement trades and first settlement of normal trades in
Consolidated Macquarie Shares
SYD Securities transferred to entitled Macquarie Shareholders
Holding statements for SYD Securities despatched
Sale Facility Proceeds paid
2.30 pm AEDT on
10 December 2013
7.00 pm AEDT on
10 December 2013
12 December 2013
13 December 2013
16 December 2013
20 December 2013
7:00 pm AEDT
7:00 pm Sydney time
20 December 2013
By 31 December 2013
31 December 2013
2 January 2014
6 January 2014
7.00pm AEDT
7 January 2014
13 January 2014
By 17 January 2014
By 3 March 2014
Please note that all dates and times are indicative only and subject to change. The Directors reserve the
right to amend these dates and times in their absolute discretion.
It is important that you complete and return the enclosed Holder Election Form or
complete an election online at www.investorvote.com.au/mqgholderelection by the time
noted above. If you do not, then your SYD Securities will be initially registered in the name of
the Nominee on your behalf.
Unless otherwise stated all $ amounts refer to Australian Dollars.
You should read this document carefully and in full before deciding how to vote on the
Constitution Amendment, the Distribution and the Consolidation. If necessary, please consult
your financial, investment, legal, taxation or other professional adviser.
If you have any questions please contact the Macquarie SYD Distribution information line on
1300 389 485 (within Australia)
+61 3 9415 4129 (outside Australia)
1
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
1
INTRODUCTION
The Proposal at a Glance
– Eligible Macquarie Shareholders to receive one SYD Security for each Macquarie Share held.
– Macquarie Shareholders holding 500 or fewer Macquarie Shares to be offered the ability to sell those
SYD Securities pursuant to the Sale Facility.
– Macquarie Shares to be consolidated on a 0.9438 for one basis to facilitate greater comparability of
share prices and financial metrics of Macquarie before and after the Distribution.
Macquarie Group holds approximately 17% of the issued stapled securities of ASX listed Sydney Airport
(SYD) as an investment. It is proposed to distribute the majority of these SYD stapled securities (SYD
Securities) to Macquarie Shareholders on a one for one basis (Distribution).
With a strong balance sheet position and excess regulatory capital, Macquarie considers that an in
specie distribution is an equitable way to distribute the value in SYD to Macquarie Shareholders so that
they can directly participate in the ownership of SYD. Macquarie Shareholders can decide whether to
maintain an ongoing investment in SYD based on their individual circumstances.
A component of the Distribution will be a Capital Return on Macquarie Shares and the balance of the
Distribution will be a Special Dividend on Macquarie Shares. Approval of the Distribution will require the
Capital Return Resolution to be passed as an ordinary resolution of Macquarie Shareholders.
Macquarie will offer Macquarie Shareholders holding 500 or fewer Macquarie Shares (on a preConsolidation basis) the opportunity to elect to participate in the Sale Facility which will allow those
Shareholders to sell the SYD Securities to which they are entitled for cash while minimising transaction
costs. In addition, Macquarie Shareholders who are Ineligible Shareholders will have the SYD Securities
to which they would otherwise be entitled, sold pursuant to the Sale Facility. Refer to section 6.2 for
further information about the Sale Facility and proceeds from the Sale Facility.
If the Distribution is implemented, Macquarie Shares may trade at a lower price on the ex–Distribution
Date than they would have done had the Distribution not been made. This is because an investment in
Macquarie will no longer include the investment in SYD which has been distributed to Macquarie
Shareholders. In order to facilitate comparability of share prices and financial metrics of Macquarie before
and after the Distribution, the Consolidation is proposed whereby Macquarie Shares will be consolidated
on a 0.9438 for one basis (with any resulting fraction rounded up on a per registered shareholder basis)
to reflect the size of the Capital Return component of the Distribution which represents approximately
5.6 per cent of Macquarie’s market capitalisation based on current information.
For example, if you held 100 Macquarie Shares before the Consolidation, you will hold 95 Macquarie
Shares after the Consolidation. Approval of the Consolidation will require an ordinary resolution of
Macquarie Shareholders.
In order for the SYD Securities to be registered in your name on the Distribution Date you will need to
complete and return the enclosed Holder Election Form, or complete the election online at
www.investorvote.com.au/mqgholderelection, by the Election Date (expected to be 7.00 pm on
6 January 2014 AEDT). If you do not complete and return the Holder Election Form or make an election
online by the Election Date the SYD Securities to which you will be entitled will be registered in the name
of the Nominee on the Distribution Date. These arrangements do not apply to Ineligible Shareholders or
to Eligible Sale Facility Shareholders who elect to participate in the Sale Facility.
You are strongly encouraged to complete and return the Holder Election Form or make an
election online by the Election Date.
Making an election will afford you the benefit of a direct investment in SYD including immediate receipt of
distributions, direct receipt of SYD correspondence without the inconvenience of having your SYD
Securities subject to the Nominee Arrangements. If your SYD Securities are subject to the Nominee
Arrangements you will only be able to exercise your voting rights by giving the Nominee instructions as to
how to vote and there will be a delay in you receiving payments (including distribution payments) and
communications from SYD. That is because those payments and communications will first go to the
2
Nominee and then the Nominee will pass those payments and communications through to you.
Prior to the Capital Return and Consolidation Resolutions being considered by shareholders, it is
proposed to amend the Constitution. The existing Constitution allows for the declaration of in specie
dividends. The purpose of the Constitution Amendment Resolution is to extend and expand the ancillary
powers that are available to implement in specie dividends and to address reductions of capital, which
will facilitate the Distribution and provide greater flexibility for the payment of distributions in the future.
Approval of the Constitution Amendment will require a special resolution of Macquarie Shareholders. The
Capital Return will only become effective if the Constitution Amendment Resolution is passed. The
Consolidation Resolution will only become effective if the other two resolutions are passed.
The Directors recommend that Macquarie Shareholders vote in favour of each of the resolutions set out
in the Notice of General Meeting.
3
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
2
OVERVIEW OF THE PROPOSAL
2.1 Board recommendation
The Board recommends that you vote in favour of the Proposal for the following reasons:
– An in specie distribution is an equitable way to distribute the value in SYD to Macquarie Shareholders
so that they can directly participate in the ownership of SYD. Eligible Macquarie Shareholders will be
able to decide whether to maintain an ongoing investment in SYD based on their individual
circumstances;
– The Distribution facilitates a return of capital. Macquarie will continue to maintain a strong balance
sheet position and a level of shareholders’ equity for prudent and efficient capital management (see
section 3.3 below);
– The Distribution is expected to increase Macquarie’s return on shareholders’ equity; and
– The share Consolidation reflects the impact of the Capital Return component of the Distribution
based on current information (see section 6.3 below) and facilitates comparison of Macquarie’s
financial metrics before and after the Distribution.
At the meeting of the Board at which the Proposal was approved, the Managing Director and Chief
Executive Officer (“CEO”), abstained from voting. The decision of the Non-Executive Directors referred to
in section 3.5 affects Executive Key Management Personnel, of which the CEO is one.
2.2 Possible disadvantages
Macquarie has considered the following possible disadvantages associated with the Proposal:
– Macquarie will not receive any future benefits from continuing to hold the investment in SYD
proposed to be distributed, including distributions and any capital appreciation;
– Transaction costs will be incurred if the Proposal proceeds, though these are not considered to be
material to Macquarie. Macquarie Shareholders may incur brokerage and other transaction costs if
they subsequently dispose of the SYD Securities;
– The Distribution is likely to result in a taxable gain for Macquarie;
– The Proposal will reduce Macquarie’s shareholders’ equity;
– The Distribution may have tax consequences for Macquarie Shareholders (refer to section 5);
– Eligible Macquarie Shareholders will be responsible for making their own investment decisions
regarding the SYD Securities they receive under the Distribution whereas currently these decisions
are made by Macquarie. As Macquarie has significant expertise in infrastructure assets, it may be
that Macquarie is better able to manage an investment in SYD than individual Macquarie
Shareholders; and
– There may be some inconvenience for Macquarie Shareholders who hold SYD Securities subject to
the Nominee Arrangements because they will only be able to exercise voting rights attached to the
SYD Securities by giving the Nominee instructions as to how to vote, and there will be a delay in
those Macquarie Shareholders receiving distribution payments and communications from SYD.
Macquarie Shareholders can ensure their SYD Securities are not subject to the Nominee
Arrangements by completing and returning the Holder Election Form by the due date.
2.3 Risks associated with the Proposal
Macquarie has also identified the following risks associated with the Proposal:
– Although the SYD Securities are quoted on the ASX, there is no guarantee of the liquidity or the price
at which SYD Securities will trade. There is also no guarantee that the combined market value of
Macquarie Shares and the distributed SYD Securities after the Distribution will be equal to or more
than the market value of Macquarie Shares before the Distribution;
– If the Proposal is approved, Macquarie Shareholders may prefer to sell their SYD Securities rather
than retain them. Additionally, the Sale Facility will result in a proportion of SYD Securities being sold
on market over a period following the Distribution. Macquarie intends to sell certain residual direct
holdings of SYD Securities and those SYD Securities received on behalf of MEREP participants that
cannot be distributed. Given the significant shareholding of Macquarie in SYD this cumulative selling
may have an adverse impact on the price of SYD Securities and the outcome of the Sale Facility;
– There may be delays or unexpected costs in executing the Proposal, or the Proposal may not be
4
–
approved; and
Individual Macquarie Shareholders will be more directly exposed to the risks associated with an
investment in SYD than is the case with the indirect exposure to the SYD business through an
investment in Macquarie Shares. Certain of the risks associated with an investment in SYD Securities
are set out in section 4.5, however this list is not exhaustive. While Macquarie and Macquarie
Shareholders are currently exposed to these risks through Macquarie’s investment in SYD, those
risks are more diversified through Macquarie’s other investments when compared to holding a direct
investment in SYD.
2.4 Alternatives considered
In developing the Proposal, Macquarie considered the following alternatives to the Proposal:
– Undertaking no transaction and maintaining the investment in SYD; and
– Selling the investment in SYD.
Macquarie has assessed the Distribution and the alternatives in light of Macquarie’s regulatory capital
position, earnings, key financial metrics and value and fairness to shareholders.
Macquarie has a strong balance sheet and excess regulatory capital. A sale of SYD would provide
Macquarie with capital and funding that it does not presently need and this would reduce shareholder
returns.
The Board believes the proposed transaction is an equitable way of delivering the value of the SYD
investment to Macquarie Shareholders and is in the best interest of Macquarie Shareholders.
5
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
3
IMPACT ON MACQUARIE
3.1 Effect on financial position
The historical pro forma consolidated statement of financial position presented below has been prepared
to illustrate the effect of the proposed Distribution and Consolidation on Macquarie Group on a pro forma
basis as at 30 September 2013.
It has been derived from the consolidated statement of financial position of Macquarie Group as at 30
September 2013 and reflects the position as if the Distribution and the Consolidation were completed on
that date. As a result, the actual financial impact of the Distribution and the Consolidation will differ from
the pro forma information as it is not expected that the Distribution will take place until 13 January 2014.
In addition, it is based on an assumed closing price of SYD Securities on the Trading Day prior to the
Distribution Date, which is subject to change.
The historical pro forma consolidated statement of financial position has been prepared based on the
accounting policies disclosed in the financial report of Macquarie Group for the half-year ended 30
September 2013 and by applying the following pro forma assumptions:
– 339.9m Macquarie Shares on issue;
– SYD Securities closing price on ASX of $4.17 on the Trading Day prior to the Distribution Date; and
– Macquarie Group recognises a gain on distribution in its income statement on the disposal of SYD
Securities of $377 million (based on the assumed Closing Price of SYD Securities of $4.17).
6
Macquarie Group Limited and its subsidiaries
Statement of financial position
as at 30 September 2013.
Reported
Sep-13
A$m
Assets
Receivables from financial institutions
Trading portfolio assets
Derivative assets
Investment securities available for sale
Other assets
Loan assets held at amortised cost
Other financial assets at fair value
through profit or loss
Property, plant and equipment
Interests in associates and joint ventures
accounted for using the equity method
Intangible assets
Deferred tax assets
Total assets
20,001
22,489
14,647
16,578
12,335
54,476
Distribution
A$m
Consolidation
A$m
(1)
Pro forma
Sep-13
A$m
20,000
22,489
14,647
15,161
12,335
54,476
(1,417)
3,116
6,175
3,116
6,175
2,497
1,276
1,010
154,600
2,497
1,276
1,043
153,215
33
(1,385)
–
Liabilities
Trading portfolio liabilities
Derivative liabilities
Deposits
Other liabilities
Payables to financial institutions
Other financial liabilities at fair value
through profit or loss
Debt issued at amortised cost
Provisions
Deferred tax liabilities
Total liabilities excluding loan capital
1,205
43,755
225
667
138,443
104
–
1,205
43,755
225
667
138,547
Loan capital
Subordinated debt at amortised cost
Total loan capital
Total liabilities
Net assets
3,438
3,438
141,881
12,719
–
104
(1,489)
–
–
–
3,438
3,438
141,985
11,230
5,893
726
5,610
(968)
(256)
(265)
12,229
490
12,719
(1,489)
–
(1,489)
Equity
Contributed equity
Reserves
Retained earnings
Total capital and reserves attributable
to ordinary equity holders of
Macquarie Group Limited
Non-controlling interests
Total equity
3,485
14,149
42,694
12,638
19,625
3,485
14,149
42,694
12,742
19,625
104
4,925
470
5,345
–
–
–
10,740
490
11,230
7
Macquarie Group Limited
macquarie.com.au
Explanatory Memorandum
Explanatory Memorandum
continued
3.2 Impact on share price and financial ratios
If the Distribution is implemented, Macquarie Shares may trade at a lower price on the ex-Distribution
Date than they would have done had the Distribution not been made. This is because an investment in
Macquarie will no longer include the investment in SYD which has been distributed to Macquarie
Shareholders.
If the Consolidation is implemented, Macquarie Shares may trade at a higher price than they would have
done had the Consolidation not occurred. The conversion ratio reflects that the Capital Return which
represents approximately 5.6 per cent of Macquarie’s market capitalisation based on the average
VWAPs of Macquarie Shares and SYD Securities over the 20 trading days to 30 October 2013. The
proposed Consolidation would result in the conversion of one Macquarie Share into 0.9438 Macquarie
Shares (with any resultant fraction rounded up) to facilitate greater comparability of share prices and
financial metrics of Macquarie before and after the Distribution.
The effect of the proposed Distribution and Consolidation on annualised return on ordinary equity (“RoE”)
and basic earnings per share (“Basic EPS”) are presented below. The historical pro forma financial ratios
reflect the financial ratios for the year ended 31 March 2013 and the half-year ended 30 September 2013
as if the Distribution and the Consolidation were completed immediately before the start of each
respective period. As a result, the gain on distribution of SYD to shareholders is excluded from this
analysis and the actual impact of the Distribution and the Consolidation on the financial ratios will differ
from the historical pro forma information as it is not expected that the Distribution and Consolidation take
place until 13 January 2014.
The historical pro forma financial ratios have also been prepared assuming Macquarie Group’s profit
attributable to ordinary equity holders is reduced by the amount of the distributions received from SYD
(including any effects of staff compensation and income tax).
Financial Year to 31 March 2013
RoE
Basic EPS
Half-year to 30 Sep 2013
RoE
Basic EPS
Reported
A$m
Distribution
A$m
7.8%
$2.51
8.7%
$1.50
Consolidation
A$m
Proforma
A$m
0.8%
($0.11)
$0.14
8.6%
$2.54
1.0%
($0.06)
$0.09
9.7%
$1.53
3.3 Impact on capital structure and regulatory capital
The proposed Consolidation will reduce the number of Macquarie Shares on issue from approximately
339.9 million shares to approximately 320.8 million shares.
As the Consolidation applies equally to all Macquarie Shareholders, individual shareholdings will be
reduced in the same ratio as the total number of Macquarie Shares (subject to the rounding of fractions).
As a consequence, the Consolidation will have no material impact on the percentage interest of each
individual Macquarie Shareholder.
As at 30 September 2013, the Macquarie Group’s reported regulatory capital surplus was approximately
$3.1 billion on an APRA Basel III basis(1).The Distribution is expected to reduce the regulatory capital
surplus by approximately $0.6 billion, once the release of regulatory capital held against the SYD
investment and the profit recognised on the Distribution are considered. In addition, a number of capital
initiatives have been completed or are currently in progress and expected to be completed before the
Distribution is made. After taking these capital initiatives into account, the expected overall reduction in
capital surplus(1) is at most $0.25 billion.
(1) Capital Surplus calculated using a capital requirement of 7% of risk weighted assets.
8
Macquarie has previously announced an on-market share buyback $0.5 billion of which $0.25 billion has
been completed.
The estimated reduction in regulatory capital surplus of $0.25 billion is consistent with the outstanding
balance of the ordinary share buyback. With the implementation of this proposal, that remaining buyback
will be withdrawn.
The final impact on the Macquarie Group regulatory capital surplus will be subject to movements in
market prices – in particular of SYD Securities. In addition, Macquarie’s strategy is to continually assess,
and maintain the flexibility to pursue strategic merger and acquisition opportunities and other corporate
transactions as they arise across its various businesses. Any particular opportunity or transaction that
Macquarie determines to pursue may also impact Macquarie’s regulatory capital position.
Macquarie has received the necessary regulatory approvals to undertake the Distribution.
3.4 Impact on hybrid and other securities
The Macquarie Group has on issue $600 million of Macquarie Capital Notes, US$250 million of
Exchangeable Capital Securities, US$400 million of Preferred Membership Interests, £42.5 million of
Macquarie Income Preferred Securities and $400 million of Macquarie Income Securities.
The Distribution and the Consolidation will not result in any adjustment to the terms of the above hybrid
securities.
Macquarie Group has on issue exchangeable shares issued by subsidiaries of Macquarie as
consideration for the acquisition of Tristone Capital Global Inc in 2009 and Orion Financial Inc in 2007. As
at 30 October 2013, 584,320 exchangeable shares were on issue. The Distribution and the
Consolidation will constitute Macquarie special events under the terms of issue of the exchangeable
shares and will result in distributions and adjustments equal to the economic equivalent of the
Distribution and the Consolidation.
3.5 Impact on Macquarie employee equity plans
Under the Macquarie Group Employee Retained Equity Plan (“MEREP”), Macquarie has granted various
awards to certain employees, including Restricted Share Units (“RSUs”), Deferred Share Units (“DSUs”)
and, to the most senior executives only (the Executive Committee Members), Performance Share Units
(“PSUs”).
The number of RSUs will be consolidated on the same basis as all other Macquarie Shares under the
Consolidation and the number of DSUs and PSUs will be adjusted in the same ratio as the Macquarie
Shares under the Consolidation. In respect of the Distribution, RSU holders will receive SYD Securities in
respect of the RSUs allocated to them. DSU holders will not receive any SYD Securities but will receive a
cash amount equivalent to the Distribution in respect of each DSU, less any tax that is required to be
withheld. PSU holders are not entitled to receive SYD Securities nor any equivalent payment.
The Non-Executive Directors have considered the impact of the transaction on MEREP. The distribution
of SYD Securities will occur in the same manner as for other Macquarie Shareholders in respect of RSUs
and as otherwise described above in respect of DSUs. Because of the structure of the MEREP trust and
the contractual retention arrangements with staff, it is not possible to retain the SYD Securities or impose
similar retention arrangements on SYD Securities as those which exist with MEREP. Therefore, the NonExecutive Directors intend to exercise discretion to increase the retention rate and to amend the vesting
and release period for FY2014 profit share to reflect the impact of the Proposal on MEREP. This will
apply to Executive Key Management Personnel and other senior executives.
Options held by staff under the Macquarie Group Employee Share Option Plan will be consolidated in the
same ratio as Macquarie Shares under the Consolidation. Consistent with the ASX Listing Rules, the
exercise price of the options will be amended in inverse proportion to the Consolidation ratio on or about
20 December 2013, being the effective date of the Consolidation, then reduced by the amount of the
Capital Return per Macquarie Share on the Distribution Date.
9
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
4
SYDNEY AIRPORT
Except where otherwise stated or is clear from the context, the information in this section has been
sourced from public information released by SYD to ASX. Shareholders should refer to the ASX website
at www.asx.com.au to access SYD’s periodic and continuous disclosures for further information.
4.1 Overview of SYD
SYD is an ASX listed entity currently comprising two stapled Australian unit trusts, Sydney Airport Trust 1
(SAT1) and Sydney Airport Trust 2 (SAT2). The responsible entity of SAT1 and SAT2 is SAHL.
SYD’s principal activity, via its investment in Southern Cross Airports Corporation Holdings Limited
(“SCACH”), is the provision of infrastructure at, and the operation of, Sydney (Kingsford Smith) Airport
(“Sydney Airport”). This includes both aeronautical and commercial operations. Sydney Airport is
Australia’s largest international gateway and primary airport.
On 14 August 2013, SYD announced a transaction involving:
– Minority Acquisitions: Moving from 84.8% to 100% ownership of Sydney Airport through acquiring all
minority ownership interests in the SYD operating entities. On 23 September 2013, SYD announced
that it had successfully completed the Minority Acquisitions;
– ATO Resolution: An in-principle non-binding agreement with the Australian Taxation Office (“ATO”) to
allow for the settlement of all matters relating to deductibility of distributions paid on certain
instruments in the SAT2 group structure. SYD expects to formalise these arrangements in a binding
settlement deed with ATO (in conjunction with the completion of the tax rulings relating to the SYD
Simplification Proposal outlined below), which involves SYD making a primary tax and interest
payment of $69 million; and
– SYD Simplification Proposal: Simplification of SYD’s structure following the Minority Acquisitions.
Amongst other things, this will result in:
– SYD securityholders holding new stapled securities comprised of one SAT1 unit and one Sydney
Airport Limited (“SAL”) share;
– Retirement and replacement of the responsible entity of SAT1; and
– Simplification of the SYD and Sydney Airport structure.
The SYD Simplification Proposal is subject to certain conditions including a securityholder vote which is
scheduled to take place on 22 November 2013.
SYD released an explanatory memorandum relating to the SYD Simplification Proposal on 25 October
2013. This document, which can be found on the ASX website (www.asx.com.au), includes the key risks
and disadvantages that have been identified and an overview of the ATO Resolution. Subject to the
outcome of its securityholder vote and satisfaction of certain other conditions, SYD expects its
simplification to be completed on or about 4 December 2013. Further material relating to the SYD
Simplification Proposal may be released by SYD on the ASX website.
Macquarie has provided advisory services to SYD for a number of years, and is presently advising on the
SYD Simplification Proposal.
4.2 Summary SYD financial information
The following section sets out summary historical financial information concerning SYD on a reported and
pro forma basis for the Minority Acquisitions and SYD Simplification Proposal. It is extracted from the
explanatory memorandum dated 25 October 2013 prepared by SYD for the SYD Simplification Proposal.
Macquarie Shareholders should note the important information set out in section 4.2(c).
a) Financial performance
The table below sets out the pro forma historical statement of financial performance for SYD based on
the historical statement of financial performance for SYD for the half-year ended 30 June 2013 extracted
from the reviewed financial statements of SYD, adjusted for certain pro forma transactions and
adjustments to reflect the Minority Acquisitions and the SYD Simplification Proposal as if those had been
implemented and effective from 1 January 2013 as below.
10
Revenue
Other income
Total revenue
SYD
reported for the
half-year ended
30 Jun 13
$m
555
(1)
554
Finance costs
Other expenses
Total operating expenses
Profit/(loss) before
income tax expense
Income tax expense
Profit/(loss) after income
tax expense
Profit/(loss) attributable to:
Security holders
Non-controlling interest
Adjustments
Minority
Acquisitions
$m
Adjustments
SYD
Simplification
Proposal
$m
(2)
(2)
(2)
(2)
53
(40)
2
2
57
(40)
13
2
2
17
24
(11)
13
(9)
11
2
2
17
–
17
242
259
501
2
SYD
proforma for the
half-year ended
30 Jun 13
$m
555
(1)
554
242
255
497
The pro forma historical statement of financial performance for SYD has been derived by adjusting the
historical statement of financial performance for SYD for the half-year ended 30 June 2013 as follows:
i)
Minority Acquisitions adjustments
Transaction costs
Adjustments have been made to reflect the reduction in expenses for transaction costs expensed in the
pro forma historical statement of financial performance for SYD during the half-year period to 30 June
2013 of $1.6 million relating to Minority Acquisitions not able to be capitalised as the transaction had not
yet occurred (tax effect not adjusted). Capitalisation of these transaction costs in the value of the
investment is permitted under Australian Accounting Standards and is therefore reflected in the pro
forma historical statement of financial position for SYD outlined below.
Non-controlling interest
Adjustments have been made to remove the profit / (loss) attributable to non-controlling interests in the
half-year period to 30 June 2013.
ii)
SYD Simplification Proposal adjustments
Transaction costs
Adjustment has been made to reflect the reduction in expenses for transaction costs expensed in the pro
forma historical statement of financial performance for SYD during the half-year period to 30 June 2013
of $1.6 million relating to the Proposal not able to be capitalised as the transaction had not yet occurred
(tax effect not adjusted). Capitalisation of these transaction costs in the value of the investment is
permitted under Australian Accounting Standards and is therefore reflected in the pro forma historical
statement of financial position for SYD outlined below.
b) Financial position
The table below sets out the consolidated historical statement of financial position of SYD as at 30 June
2013 extracted from the reviewed financial statements of SYD, adjusted for certain pro forma
transactions and adjustments to reflect the Minority Acquisitions and SYD Simplification Proposal and as
having been completed on that date as outlined below.
11
Macquarie Group Limited
macquarie.com.au
Explanatory Memorandum
Explanatory Memorandum
continued
SYD
reported for the
half-year ended
30 Jun 13
$m
Current assets
Cash and cash equivalents
Receivables
Other financial assets
Other assets
Total current assets
Non-current assets
Receivables
Property, plant and
equipment
Intangible assets
Other assets
Total non-current assets
Total assets
Current liabilities
Distribution payable
Payables
Interest bearing liabilities
Deferred income
Derivative financial
instruments
Provisions
Current tax liabilities
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Derivative financial
instruments
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Retained profits
Reserves
Total security holders'
interests
Non-controlling interest in
controlled entities
Total equity
12
416
105
16
10
547
Adjustments
Minority
Acquisitions
$m
Adjustments
Simplification
Proposal
$m
(61)
(6)
(61)
(6)
SYD
proforma for the
half-year ended
30 Jun 13
$m
349
105
16
10
480
37
37
2,508
7,800
14
10,359
10,906
2,508
7,800
14
10,359
10,839
(61)
(6)
205
154
217
24
205
154
217
24
138
9
69
816
138
9
69
816
6,510
6,510
29
1
1,628
8,168
8,984
1,922
(61)
(112)
(112)
(112)
106
29
1
1,516
8,056
8,872
1,967
3,949
320
(2,395)
1,230
2
(1,245)
114
(8)
5,179
436
(3,648)
1,874
(13)
106
1,967
48
1,922
(48)
(61)
106
–
1,967
The pro forma historical statement of financial position for SYD has been derived by SYD by adjusting the
historical statement of financial position of SYD as at 30 June 2013 as follows:
i)
Minority Acquisitions adjustments
Issue of SYD securities
The Minority Acquisitions were undertaken by issuing SYD Securities proportionate to the underlying
minority interests in the SYD operating entities being acquired as follows:
– 247.5 million SYD Securities were issued to entities which held an 11.3% interest in the SYD
operating entities; and
– 85.6 million SYD Securities were issued under an institutional placement that raised $308.2 million in
respect of the acquisition of interests from entities that held interests in the SYD operating entities
and chose to monetise their holdings.
333.1 million SYD Securities were issued in total, representing 15.2% of the post-issue SYD Securities
on issue (which is proportionate with the 15.2% interest in the SYD operating entities acquired).
SYD’s contributed equity has been credited by $1,230.1 million to reflect the 333.1 million SYD
Securities issued in respect of the Minority Acquisitions based on the ASX existing stapled security price.
Reserves have been adjusted for the issue of SYD Securities net of transaction costs.
Non-controlling interest in controlled entities
SYD already consolidated its 84.8% interest in the SYD operating entities by recognising 100% of the
SYD operating entities’ assets and liabilities in its consolidated statutory statement of financial position
and will continue to account for its investment in the SYD operating entities on this basis following the
Minority Acquisitions.
Non-controlling interests in controlled entities have been reduced by $48.0 million to reflect SYD’s move
to 100% ownership of the SYD operating entities.
Payment of minority interest distributions
$17.0 million relating to SYD’s second quarter distribution was paid to the minorities as part of the
acquisition mechanics.
SYD’s cash and cash equivalents and reserves have been reduced for the minority interest payment
amounts.
Payment of transaction costs
Transaction costs of $45.5 million primarily relate to $41.1 million net stamp duty costs, $1.9 million in
net underwriting costs and $2.5 million net professional advisory fees (external consultants and advisers
including legal, financial and taxation adviser costs, independent expert and ASX-listing costs) associated
with the Minority Acquisitions.
SYD’s cash and cash equivalents has been adjusted by a credit of $43.9 million ($1.6 million had already
been paid as at 30 June 2013) and reserves have been reduced by $45.5 million for SYD’s net
transaction costs.
ii)
SYD Simplification Proposal adjustments
Payment of transaction costs
$8 million of estimated professional advisory fees (external consultants and advisers including legal,
financial and taxation adviser costs and the independent expert) and ASX-listing costs associated with
the SYD Simplification Proposal.
SYD’s cash and cash equivalents has been adjusted by a credit of $6.4 million ($1.6 million had already
been paid as at 30 June 2013) and reserves have been adjusted by $8 million for SYD’s net transaction
costs.
13
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
Deferred Tax balances
If the SYD Simplification Proposal is implemented, the Sydney Airport Limited tax consolidated group will
hold a 100% direct interest in the SCACH tax consolidated group.
As a result SCACH and its wholly-owned subsidiaries will join the Sydney Airport Limited tax
consolidated group. Due to the application of the tax consolidation provisions, which includes the making
of certain elections and the resetting of the tax bases of certain SCACH tax consolidated group assets
and liabilities, it is estimated that there will be a net reduction to the deferred tax balance of
approximately $112 million.
c) Important notice
The pro forma historical financial information for SYD set out in this section 4.2 was prepared by SYD for
illustrative purposes only to illustrate the impact of the Minority Acquisitions and the SYD Simplification
Proposal in the pro forma historical statement of financial position of SYD as at 30 June 2013 and the
pro forma historical statement of financial performance of SYD for the half-year ended 30 June 2013 (in
sections 4.2(a) and (b) respectively).
The pro forma historical financial information is not represented as being indicative of SYD’s views on
SYD’s future financial performance or position. The information was presented by SYD to reflect the
financial performance of SYD as if the Minority Acquisitions and SYD Simplification Proposal had taken
place on 1 January 2013 and financial position of Sydney Airport as if the Minority Acquisitions and SYD
Simplification Proposal had taken place on 30 June 2013, after adjusting for the impact of the
adjustments set out in sections 4.2(a) and (b). It does not take into account the financial performance,
cash flows or other movements in the balance sheet or income statement of SYD for the period from 30
June 2013 to the date of this Explanatory Memorandum. Macquarie Shareholders should note that past
results are not a guarantee of future performance.
4.3 Historical SYD Security price
The following chart provides details of the trading history of SYD Securities on ASX from 1 January 2011
to 30 October 2013:
Source: IRESS
SYD has announced that the record date for its next distribution is expected to be 31 December 2013.
Macquarie will remain entitled to this distribution under the proposed timetable.
14
4.4 Further information concerning SYD
As an ASX listed entity SYD is required to comply with the periodic and continuous disclosure obligations
of the ASX Listing Rules and the Corporations Act.
Investors in SYD should have regard to the broad range of public information available in relation to SYD
though SYD’s periodic and continuous disclosures.
Copies of SYD’s periodic and continuous disclosures can be accessed on the ASX website at
www.asx.com.au.
4.5 Risks associated with an investment in SYD
As with any listed entity, there are certain risks associated with an investment in SYD. The risks
associated with an investment in SYD differ from the risks associated with an investment in Macquarie.
Macquarie is currently exposed to these risks given its current investment in SYD and Macquarie
Shareholders are therefore currently indirectly exposed to these risks due to their investment in
Macquarie. Macquarie is an experienced infrastructure investor with resources dedicated to managing its
investments. While Macquarie Shareholders already have an indirect exposure to SYD through their
investment in Macquarie, as a result of moving to a direct investment, Eligible Macquarie Shareholders
will be responsible for decision making in respect of their investment in SYD.
While this section aims to highlight some of the key risk factors associated with an investment in SYD, it
is not exhaustive. Macquarie Shareholders should consider the risks described here (extracted from the
SYD explanatory memorandum dated 25 October 2013 referred to above), together with all the other
information in this document and other SYD periodic and continuous disclosure announcements, and
consult their financial adviser or other professional adviser before determining how to vote on the
Proposal.
a)
Risks Specific to SYD
There are a number of specific risk factors which will affect the financial performance of SYD, and
accordingly returns on an investment in SYD. Some of these factors are discussed below.
Management
SYD’s financial performance is impacted upon by the effectiveness of its management and SYD’s ability
to attract and retain key personnel.
Tax risk
There is a risk that changes in tax law (including income tax, goods and services tax and stamp duty) or
changes in the way tax laws are interpreted may impact the historical or future tax liabilities of SYD. SYD
is seeking a number of binding rulings in relation to the SYD Simplification Proposal and its proposed
settlement with the ATO on certain matters (see 4.1 above). Further information on these rulings is set
out in SYD’s explanatory memorandum dated 25 October 2013. If these binding rulings are not received,
SYD has noted that a degree of uncertainty would continue to exist in relation to SYD’s current and
future tax position.
Airports Act securityholder risks
Sydney Airport is subject to foreign ownership restrictions under the Airports Act 1996 (Cth). There is a
risk that those restrictions may be breached. In order to ensure compliance with ownership restrictions
under the Airports Act, divestment provisions in the constitutions of SAT1 and Sydney Airport Limited will
be activated:
– if foreign ownership reaches the relevant foreign ownership limits in those constitutions, which could
result in Foreign Persons (as defined in the Sydney Airport Limited Constitution) that are New Stapled
Securityholders being required to divest some or all of their New Stapled Securities; or
– where other relevant ownership restrictions are breached
Sydney Airport undertakes beneficial interest tracing of its register; however, this is historical information
as trades after the date of the tracing report will affect its accuracy.
15
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
SYD advised that its foreign ownership on 11 October 2013 was then 29.67 per cent.
Sydney Airport lease
The viability of the SYD business depends on the ability to maintain the lease over Sydney Airport from
the Commonwealth of Australia. The lease expires in 2048, with an option exercisable by SYD to extend
it for a further 49 years.
Second Sydney airport
Sydney Airport revenues in the medium to long term could be adversely affected by the development of
a second Sydney airport, particularly if SYD’s right of first refusal to develop and operate such airport
which subsists to 2032 is not exercised by SYD.
Significant indebtedness
As at 30 June 2013, SYD reported that it had a total of $7.5 billion of committed financing facilities
(drawn to $6.5 billion), of which $0.2 billion is maturing before 31 December 2013 (undrawn facilities
already in place to refinance this) and a further $0.8 billion is maturing before 31 December 2014. If SYD
is unable to refinance maturing indebtedness on commercially favourable terms (or at all) it may need to
seek more expensive debt facilities, reduce or delay capital expenditure, reduce or delay distributions to
securityholders, sell assets, raise additional equity, or take other protective measures.
Exposure to interest rate and foreign exchange fluctuations
SYD’s financial performance may be affected by fluctuations in interest rates and foreign exchange rates,
primarily due to increases associated with borrowings on a floating rate and in foreign currencies. As at
30 June 2013, SYD reported that it managed these risks by hedging 100% of foreign exchange risk on
foreign currency borrowings and 95% of its interest rate risk on borrowings but there can be no
assurance that a hedge counterparty will not default on its obligations.
Governance arrangements
Under the Put Option Deed to be entered into in connection with the proposed SYD governance
arrangements as part of the SYD Simplification Proposal, SAL will grant The Trust Company an option to
require SAL (or its nominee) to purchase all of the issued shares in the proposed new responsible entity
of SAT1 (“New RE”). The independence of New RE under the governance arrangements is an important
element in enabling greater certainty for SYD’s future tax position. If The Trust Company exercises the
option under the Put Option Deed and SAL (or one of its subsidiaries) were to acquire all of the issued
shares in New RE:
– The board of New RE may not be regarded as independent of SAL for income tax purposes; and
– The level of permitted foreign ownership in SYD under the Airports Act may also be impacted
Before The Trust Company can exercise the option under the Put Option Deed, it is required to engage
with SAL for a period which is expected to allow a replacement responsible entity, or an alternative
purchaser of the issued shares in New RE, to be identified. This is intended to avoid any adverse
outcome that would arise on the issued shares in New RE being acquired by SAL (or one of its
subsidiaries).
b) Risks specific to airports and the infrastructure sector
There are a number of factors which will affect the performance of investments in the airport and
infrastructure sector, and accordingly returns on an investment in SYD. Some of these factors are
discussed below.
16
Passenger and aircraft movements
The key driver of airport revenues is the number of passengers, particularly international passengers.
The number of passengers using airports may be affected by a number of factors including general economic
conditions, demographic changes, changes in preferences of travellers and overall airline costs (including, for
example, fuel costs), and globally significant economic, political, social and natural events (for example, the
global financial crisis, acts of terrorism or war, pandemic outbreaks such as Severe Acute Respiratory
Syndrome (SARS), bird flu or swine flu, and acts of nature such as volcanic eruptions and earthquakes).
Aeronautical revenue is generated through charges levied for the use of airport infrastructure, with
charges typically levied on the basis of total aircraft weight and passenger volumes. Aeronautical revenue
is therefore dependent on passenger numbers, aircraft movements, and the investment.
Performance of non-aeronautical revenues
Non-aeronautical revenues include retailing, car parking and property. Retail revenues are driven by
passengers and their propensity to spend in the retail outlets provided at the airport. Changes to
passenger profiles, economic factors or reduced competitiveness of airport retail offerings may affect
levels of expenditure. Car park revenues are driven by the propensity of airport users to park their cars at
the airport. Reduced demand from users could result from competition from other modes of transport
and lower car park utilisation rates.
Regulatory and government policy
For many airports, a substantial proportion of revenue is generated from regulated activities. There is a
risk that operations and airport revenues could be adversely affected by changes to regulations.
Operational risk
The operation of an airport is a complex undertaking and involves many risks including the effect of poor
weather, variable aircraft movements, traffic congestion, reliance on technical equipment, airline hub
requirements and design limitations. Changes to the importance of these factors could increase
operating costs and potentially impact the profitability or viability of airports.
Competition
The market share of an airport may be adversely affected by competing airports developing or increasing
their capacity or expanding their catchment area. Development and expansion of surface transport links
such as motorways and high-speed rail may also affect airport market share.
Environmental risk
Airports may attract opposition from environmental groups in relation to various environmental issues,
who may attempt to limit the activities of an airport, its hours of operation or its impact on surrounding
communities through lobbying and political pressure, litigation or direct action. Changes in environmental
and planning regulation may also impact airport development.
Actions by airlines and other third parties
Actions by airlines which affect passenger numbers could adversely affect the financial performance of
airports, particularly where airlines have a major presence at an airport, such as Qantas and Virgin
Australia at Sydney Airport. Decisions on the timing and origin/destination of services, price of airline
seats and the aircraft used may impact on traffic levels at airports.
Decisions and activities of third parties such as government agencies (for example, air traffic control, fire
fighting services, customs and quarantine) and others (for example, aircraft fuel suppliers and refuellers,
ground handlers, security and ground transport management providers) can also affect the financial
performance of airports.
17
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
Accidents
Airports are exposed to the risk of accidents, including aircraft crashes, which may result in injury or loss
of life, damage to airport infrastructure or the closure of part or all of an airport's facilities and have an
impact on ongoing traffic levels.
c) General market risks
SYD Securities are listed on ASX and are subject to price fluctuations, which can decrease the market
value of an investment in SYD. General risk factors which may adversely impact the price of SYD
Securities include:
– Australian and international economic conditions and outlook, including inflation, interest and
exchange rates;
– global equity and capital market conditions;
– changes to Australian government regulations and policies;
– changes to Australian or international fiscal or monetary policy; and
– general operational and business risks.
Liquidity risk
As a listed investment, the market value of SYD Securities may be adversely impacted by the volume of
securities being bought or sold at any point in time. Where there are relatively few buyers, the price at
which an investor may be able to sell their SYD Securities may be adversely impacted (including the
potential for cumulative selling as a result of this Proposal as explained in section 2.3).
Volatility risk
The price of SYD Securities may go up or down even over a short period of time (including as a result of
selling that may be associated with this Proposal as mentioned in section 2.3, or other factors relating to
the Proposal). Recently, markets have become more volatile. Investing in volatile conditions implies a
greater level of risk for investors than an investment in a more stable market.
18
5
TAX IMPLICATIONS
The following tax summary is a general summary of the Australian income tax and GST implications
arising for Macquarie Shareholders as a result of the Consolidation and the Distribution. As this summary
is necessarily general in nature, Macquarie Shareholders should consult with their professional tax
adviser regarding their particular circumstances.
This tax summary addresses the position of both Macquarie Shareholders who are residents of Australia
for income tax purposes (“Resident Macquarie Shareholders”) and Macquarie Shareholders who are not
residents of Australia for income tax purposes (“Non-resident Macquarie Shareholders”).
This tax summary does not address the Australian income consequences for Macquarie Shareholders
who hold their Macquarie Shares on revenue account, as trading stock, or for Macquarie Shareholders
who have elected for the Taxation of Financial Arrangement provisions (Division 230 of the Tax Act) to
apply in respect of their Macquarie Shares.
This tax summary also does not address the consequences that arise for Macquarie Shares acquired
under a Macquarie employee incentive plan, such as MEREP.
This tax summary does not address any tax consequences of participating in the Consolidation or the
Distribution arising under the laws of jurisdictions other than Australia.
This tax summary is based on the provisions of the Tax Act as at the date of this Explanatory
Memorandum.
5.1 Class Ruling
Macquarie has requested that the ATO issue a class ruling confirming the Australian income tax
consequences of the Consolidation and the Distribution for Macquarie Shareholders.
It is expected that, when issued, the final Class Ruling will confirm the income tax consequences outlined
in this summary. However, no assurance can be given that the final Class Ruling will be issued on that
basis and there remains a risk that the ATO could rule that the Australian income tax consequences are
different.
Consistent with ATO practice, it is expected that the final Class Ruling will be issued after the
Distribution. A link to the final Class Ruling will be made available on the Macquarie website when issued.
5.2 Overview of transaction
From an Australian income tax perspective, the Distribution will be treated as Macquarie:
– paying the Special Dividend: and;
– making the Capital Return.
The Special Dividend will be 40% franked and the remaining unfranked amount will be covered by a
declaration that it is ‘conduit foreign income’ for the purposes of the Tax Act.
The Special Dividend and Capital Return amounts will not be known until the Trading Day before the
Distribution Date as they are based on the Closing Price.
5.3 Acquisition of SYD Securities under the Distribution
a) Resident Macquarie Shareholders
i)
The Special Dividend
The Special Dividend will be 40% franked and accordingly will have accompanying franking credits.
Resident Macquarie Shareholders who receive the Special Dividend directly:
– must include the amount of the Special Dividend in their assessable income; and
– must also include the amount of the franking credits attached to the Special Dividend in their
assessable income and will be entitled to a tax offset equal to the amount of the franking credits
(subject to the qualifications outlined below).
19
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
Generally, to be eligible for the franking credit and tax offset, the Macquarie Shares must be held “at risk”
for at least 45 days (not including the date of acquisition or the date of disposal). This rule should not
apply to an individual whose tax offset entitlement (on all shares and interests in shares held) does not
exceed $5,000 for the income year in which the Special Dividend is paid. Entering into put or call options
(or other derivatives) in relation to the Macquarie Shares may affect whether the shares are held
sufficiently “at risk” for the purposes of the franking rules, and specific advice should be sought.
A Resident Macquarie Shareholder who is an individual, a complying superannuation entity or a
registered charity (in certain circumstances) will generally be entitled to a tax refund to the extent that the
franking credits attached to distributions for an income year exceed their tax liability for the income year.
The franked component of the Special Dividend will generally give rise to a franking credit in the franking
account of a Resident Macquarie Shareholder that is a company. Certain companies may also be able to
convert excess franking credits into carried forward tax losses.
A Resident Macquarie Shareholder that is the beneficiary of a trust or a partner in a partnership should
obtain their own advice on the tax treatment of the Special Dividend.
For Resident Macquarie Shareholders who have not previously provided their TFN, TFN exemption or
ABN to Macquarie, Macquarie will be required to pay to the ATO an amount equal to 46.5 per cent of the
unfranked component of the Special Dividend (“TFN Withholding”). In respect of such Macquarie
Shareholders, Macquarie will retain such number of the SYD Securities to which that Macquarie
Shareholder is entitled to cover the amount of the TFN Withholding.
ii)
The Capital Return
The Capital Return is not a dividend or otherwise ordinary assessable income for Resident Macquarie
Shareholders considered in this summary. It is expected that the Class Ruling will confirm that the ATO
will not make a determination that any part of the Capital Return is to be treated as a dividend for income
tax purposes.
For Resident Macquarie Shareholders who own their Macquarie Shares at the Record Date, capital gains
tax (“CGT”) event G1 happens in respect of the Capital Return at the Distribution Date.
Under CGT event G1, the cost base and reduced cost base of each Macquarie Share will be reduced
(but not below nil) by the Capital Return and a capital gain will arise to the extent (if any) that the Capital
Return exceeds the cost base of a Macquarie Share.
Resident Macquarie Shareholders who dispose of their Macquarie Shares after the Record Date and
before the Distribution Date still have a right to receive the Distribution in respect of those shares. CGT
event C2 happens for these Resident Macquarie Shareholders when they receive the Distribution. A
capital gain will arise to the extent that the Capital Return exceeds the cost base of the right, which will
likely be nil (effectively the capital gain should not include the amount of the Special Dividend).
A capital gain made from CGT event G1 or C2 will be a discount capital gain for Resident Macquarie
Shareholders that are an individual, trust or complying superannuation fund and acquired the Macquarie
Shares at least 12 months before the Distribution Date. The discount factor will vary depending on the
tax profile of the Macquarie Shareholder. Specifically, the discount factor for resident individuals and
trusts is 1/2 and for complying superannuation funds is 1/3.
b) Non-Resident Macquarie Shareholders
i)
The Special Dividend
The Special Dividend will be 40% franked, and the remaining unfranked component will be covered by a
declaration that it is ‘conduit foreign income’ for the purposes of the Tax Act. Accordingly, for Nonresident Macquarie Shareholders, the Special Dividend should not be assessable income in Australia nor
subject to dividend withholding tax.
Non-resident Macquarie Shareholders who hold their Macquarie Shares at or through a permanent
establishment in Australia should obtain advice that is specific to their circumstances.
20
ii)
The Capital Return
A Non-resident Macquarie Shareholder who receives the Distribution disregards any Australian capital
gain or loss that is made in relation to the Distribution if their Macquarie Shares are not taxable Australian
property.
Macquarie Shares should not be taxable Australian property provided the Non-resident Macquarie
Shareholder:
– together with their associates, did not hold 10% or more of the shares in Macquarie at the
Distribution Date, or at any time throughout a 12 month period starting 24 months before, and
ending on, the Distribution Date;
– is not a former Australian resident that made an election to treat their Macquarie Shares as taxable
Australian property when they ceased to be an Australian resident; and
– did not hold their Macquarie Shares at any time in carrying on a business at or through a permanent
establishment in Australia.
Other Non-resident Macquarie Shareholders should obtain their own advice as to the Australian income
tax consequences arising from the Capital Return.
c) Cost base and date of acquisition of SYD Securities
The first element of the cost base and reduced cost base for each SYD Security will be equal to the
market value on the Distribution Date of the SYD Securities received. It is expected the Class Ruling will
confirm that the market value for these purposes is their Closing Price.
SYD Securities currently comprise two separate CGT assets, being units in Sydney Airport Trust 1 and
units in Sydney Airport Trust 2. The cost base of these separate CGT assets is arrived at by allocating
the market value of SYD Securities between each of the respective CGT assets on a reasonable basis. It
is expected the Class Ruling will confirm that this allocation can be performed based on their relative net
asset values.
For CGT purposes (including eligibility for the CGT discount concession) SYD Securities should be
treated as having been acquired on the Distribution Date.
5.4 Consolidation of Macquarie Shares
For Macquarie Shareholders who beneficially own their Macquarie Shares before and after the
Consolidation:
– no CGT event will happen solely as a result of the Consolidation – that is, no capital gain or capital
loss will arise;
– broadly, the existing cost base and reduced cost base in their Macquarie Shares will be allocated
across the consolidated Macquarie Shares; and
– the consolidated Macquarie Shares will have the same date of acquisition for CGT purposes as the
original Macquarie Shares to which they relate.
21
Macquarie Group Limited
macquarie.com.au
Explanatory Memorandum
Explanatory Memorandum
continued
The following table provides an illustrative example of the income tax consequences which may arise
from the Distribution and Consolidation for an individual Resident Macquarie Shareholder(1). For the
purposes of this example the Closing Price of SYD Securities is assumed to be $4.17.
Part A: Taxation of Distribution
Number of Macquarie Shares held at Record Date
100
Price(2)
SYD Securities Closing
Total amount of Distribution
$
$
4.17
417.00
Special Dividend
Consisting of:
$
129.27
Franked amount (3)
Franking credits
Unfranked amount
Total assessable income
$
$
$
$
51.71
22.16
77.56
151.43
Gross income tax (4)
Franking credits
Tax payable
$
$
$
70.41
(22.16)
48.25
Capital Return (5)
$
287.73
$
$
1-Nov-10
100
3,640.00
36.40
$
287.73
$
$
1-Nov-10
95
3,352.27
35.29
Part B - Adjustment to cost base for Capital Return and Consolidation
Initial cost base
Purchase date
Initial number of Macquarie Shares
Initial total cost base
Initial cost base per share
Capital Return and Consolidation
Capital Return
Consolidation of shares – (100 shares at 0.9438 consolidation rate) = 95 shares
Calculation of cost base for consolidated Macquarie Shares
Purchase date
Consolidated number of Macquarie Shares
Post Consolidation total cost base (initial cost base less Capital Return)
Cost base per consolidated Macquarie Share
(1)
(2)
(3)
(4)
(5)
22
A
B
C
D = A x 0.9438
E=B-C
Different tax outcomes may arise based on different facts of each taxpayer
Assumed Closing Price of SYD Securities for purposes of this example
Special Dividend is 40% franked
Assumed marginal tax rate of 46.50%
Assume cost base of Macquarie Shares exceeds Capital Return therefore no capital gains tax but rather reduction in cost base
5.5 Holding SYD Securities
The SYD corporate structure is different to Macquarie and Macquarie Shareholders should consider the
tax implications of holding and disposing of SYD Securities and receiving distributions in respect of their
SYD Securities.
If the SYD Simplification Proposal (as outlined in section 4.1) is implemented, the component securities
that comprise the SYD Securities will change. Macquarie Shareholders should have regard to section 8
of the explanatory memorandum released by SYD on 25 October 2013 which contains information
regarding the tax implications of holding SYD Securities following the SYD Simplification Proposal.
5.6 Other Matters
a)
Sale Facility
The Australian income tax consequences outlined in section 5.3 and section 5.4 should apply equally to
Selling Shareholders and Ineligible Shareholders whose SYD Securities are sold by the Sale Agent under
the Sale Facility.
Selling Shareholders and Ineligible Shareholders should be regarded for CGT purposes as having
disposed of their SYD Securities for consideration equal to Sale Facility Proceeds.
b) Nominee Arrangement
The Australian income tax consequences outlined in section 5.3, section 5.4 and section 5.5 should
apply equally to Macquarie Shareholders whose SYD Securities are registered in the name of the
Nominee because they do not complete and return the Holder Election Form by the Election Date.
c) Australian TFN and ABN
Following the Distribution, it is expected Macquarie Shareholders (including those whose SYD Securities
are held by the Nominee) will be given the opportunity to quote their TFN, TFN exemption or ABN in
respect of their SYD Securities.
SYD Securityholders need not quote a TFN, TFN exemption or ABN in respect of their SYD Securities,
however if they do not, then TFN Withholding may be required to be deducted from any distributions in
respect of SYD Securities at the highest marginal tax rate plus 1.5% (currently 46.5%).
d) GST
There is no GST payable in respect of the Distribution.
23
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
6
FURTHER DETAILS OF THE PROPOSAL
6.1 Information on the Distribution
The total proposed Distribution per Macquarie Share will be equal to the Closing Price. The proposed
Distribution is intended to be implemented as a combination of a Special Dividend and equal reduction of
Macquarie’s ordinary share capital for the purposes of the Corporations Act. The Capital Return is an
equal reduction because it relates only to ordinary shares and applies to each Macquarie Shareholder in
proportion to the number of Macquarie Shares they hold with the terms of the reduction the same for
each Macquarie Shareholder.
The payment of the Special Dividend and the Capital Return will be satisfied by the in specie distribution
of SYD Securities to Macquarie Shareholders on the basis of one SYD Security for each Macquarie
Share. Ineligible Shareholders and Eligible Sale Facility Shareholders who elect to participate in the Sale
Facility, will have the SYD Securities to which they would otherwise be entitled transferred to the Sale
Agent for sale, pursuant to the Sale Facility and will receive the Sale Facility Proceeds in cash.
The SYD Securities will be registered in the name of the Nominee on the Distribution Date on behalf of
Macquarie Shareholders unless the Holder Election Form is completed and returned by the Election Date
(see further details below).
The Capital Return Resolution, if passed, will constitute the approval of Macquarie’s shareholders under
section 256C of the Corporations Act for the proposed equal capital reduction under section 256B of the
Corporations Act, by an amount per Macquarie Share equal to 69 per cent of the Closing Price.
For example, assuming a Closing Price of $4.17 the Capital Return would be $2.8773 per Macquarie
Share and approximately $978 million in aggregate.
No Macquarie Shares will be cancelled in connection with the equal capital reduction. Accordingly the
Capital Return itself will not affect the number of Macquarie Shares held by each Macquarie Shareholder.
However, the Consolidation will reduce the number of Macquarie Shares on issue.
Under section 256B of the Corporations Act, Macquarie may only reduce its share capital if the
reduction:
a) is fair and reasonable to Macquarie Shareholders as a whole;
b) does not materially prejudice Macquarie’s ability to pay its creditors; and
c) is approved by Macquarie Shareholders under section 256C of the Corporations Act.
The Directors are of the view that the proposed Capital Return is fair and reasonable to Macquarie
Shareholders as a whole and that the Capital Return will not materially prejudice Macquarie’s ability to
pay its creditors.
The Board has resolved to pay the Special Dividend subject to the passing of the Capital Return
Resolution and the Constitution Amendment Resolution. The amount of the Special Dividend per
Macquarie Share will be equal to the difference between the Closing Price and the Capital Return per
Macquarie Share, i.e. the Special Dividend will be 31% of the Closing Price. In the example above, if the
Closing Price is $4.17, the Special Dividend per Macquarie Share would be $1.2927 or approximately
$439 million in aggregate.
Macquarie’s Dividend Reinvestment Plan will not operate for the Special Dividend as it is not a cash
dividend.
The Capital Return Resolution will be considered by Macquarie Shareholders at the General Meeting
after consideration of the Constitution Amendment and is conditional on that amendment being
approved. In accordance with section 256C of the Corporations Act, the Capital Return Resolution must
be approved by a simple majority of votes cast by or on behalf of Macquarie Shareholders on the
resolution, in order to be passed.
For the avoidance of doubt, if the Capital Return Resolution and the Constitution Amendment Resolution
are approved by Macquarie Shareholders, the Distribution will be undertaken regardless of whether the
Consolidation Resolution is approved by Macquarie Shareholders.
24
See the notes to the Notice of General Meeting in relation to how to vote on the Capital Return
Resolution.
If the Capital Return Resolution is approved by the required majority of Macquarie Shareholders and the
condition to its implementation is satisfied, then the Distribution will be implemented and binding upon all
Macquarie Shareholders, regardless of how (or if) they vote on the resolution.
In order for the SYD Securities to be registered in the name of Eligible Macquarie Shareholders on the
Distribution Date, Macquarie Shareholders will need to complete and return the enclosed Holder Election
Form or complete an election online at www.investorcentre.com.au/mqgholderelection by the Election
Date. If Macquarie Shareholders do not complete and return the Holder Election Form by the Election
Date the SYD Securities to which they will be entitled will be registered in the name of the Nominee on
the Distribution Date. These arrangements do not apply to Ineligible Shareholders or to Eligible Sale
Facility Shareholders who elect to participate in the Sale Facility.
Macquarie Shareholders are strongly encouraged to complete and return the Holder Election
Form by the Election Date so that they can enjoy the benefit of direct investment in SYD, including
immediate receipt of distributions, direct receipt of SYD correspondence, such as annual reports and
notices of meeting, and without the inconvenience of having their SYD Securities subject to the Nominee
Arrangements. If a Macquarie Shareholder’s SYD Securities are subject to the Nominee Arrangements,
that Macquarie Shareholder will only be able to exercise its rights to vote the SYD Securities by giving the
Nominee instructions as to how to vote and there will be a delay in that Macquarie Shareholder receiving
payments (including distribution payments) and communications from SYD. That is because those
payments and communications will first go to the Nominee and then the Nominee will pass those
payments and communications through to the Macquarie Shareholder.
Macquarie Shareholders may request a copy of the Holder Election Form and reply paid envelope be
sent to their registered address by contacting Macquarie’s Share Registry on 1300 389 485 (within
Australia) or +61 39415 4129 (outside Australia).
The Nominee Arrangements have been put in place to ensure that legal title to the SYD securities is only
transferred to those persons who agree to become members of SYD. The Nominee will hold SYD
Securities transferred to it on behalf of and subject to the instructions of the Macquarie Shareholders
entitled to the SYD Securities transferred to it. A Macquarie Shareholder may instruct the Nominee as to
how to vote the SYD Securities held on its behalf under the Nominee Arrangements. If a Macquarie
Shareholder does not instruct the Nominee how to vote in respect of the SYD Securities held on its
behalf, the Nominee will not exercise those votes. The Nominee will distribute distributions it receives on
the SYD Securities to the Macquarie Shareholders on whose behalf those SYD Securities are held.
Macquarie Shareholders who receive SYD Securities subject to the Nominee Arrangements may instruct
the Nominee at any time to register the SYD Securities to which they are entitled in the name of that
Macquarie Shareholder or any person to whom they wish to transfer those SYD Securities.
Macquarie will pay the costs associated with the establishment and operation of the Nominee
Arrangements. Macquarie may at any time terminate the Nominee Arrangements and instruct that the
Nominee register the SYD Securities held by it in the name of the Macquarie Shareholders then holding
SYD Securities through the Nominee Arrangements.
Further details concerning the Nominee Arrangements will be provided to Macquarie Shareholders who
hold SYD Securities subject to the Nominee Arrangements, following the Election Date.
6.2 The Sale Facility
Eligible Sale Facility Shareholders may elect to participate in the Sale Facility and sell all (but not some) of
the SYD Securities which they are entitled to receive. In addition, Macquarie Shareholders who are
Ineligible Shareholders will have the SYD Securities to which they would otherwise be entitled
automatically sold under the Sale Facility.
Macquarie Shareholders who are Eligible Sale Facility Shareholders and wish to participate in the Sale
Facility should complete and return the Sale Facility Election Form accompanying this Explanatory
25
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
Memorandum using the enclosed reply paid pre-addressed envelope, or by completing an election
online at www.investorcentre.com.au/mqgsalefacility, so that it is received by the Macquarie Share
Registry by the Election Date. Macquarie Shareholders may request a copy of the Sale Facility Election
Form and reply paid envelope be sent to their registered address by contacting Macquarie’s Share
Registry on 1300 389 485 (within Australia) or +61 39415 4129 (outside Australia). Eligible Macquarie
Shareholders who do not elect to participate in the Sale Facility may keep, sell or otherwise deal with the
SYD Securities transferred to them. Macquarie may determine that Macquarie Shareholders in a country
where it may be unlawful or impractical to operate the Sale Facility will not be eligible to participate in the
Sale Facility. To date Macquarie has determined that Macquarie Shareholders whose registered address
is in, or who are a citizen or resident of, Japan will not be eligible to participate in the Sale Facility.
SYD Securities that would otherwise have been transferred to Selling Shareholders will be transferred to
the Sale Agent to be sold on their behalf under the Sale Facility.
Under the Sale Facility, the Sale Agent will sell the SYD Securities as soon as reasonably practicable after
the Distribution Date (and in any event not more than eight weeks after the Election Date or, subject to
obtaining any necessary ASIC exemptions or waivers, such longer period of time which Macquarie and
the Sale Agent determine (“Sale Period”), for the benefit of each Selling Shareholder.
The Sale Agent will sell those SYD Securities at such price and on such other terms as the Sale Agent
determines in good faith and at the risk of the Selling Shareholders.
The amount of money received by each Selling Shareholder (being their Sale Facility Proceeds) will be
calculated on an average basis so that all Selling Shareholders will receive the same price for each SYD
Security sold on their behalf, subject to rounding down to the nearest whole Australian cent.
Consequently, the amount received by Selling Shareholders for each SYD Security may be more or less
than the actual price that is received by the Sale Agent for that particular SYD Security.
As the market price of SYD Securities will be subject to change from time to time, the sale price of those
SYD Securities and the Sale Facility Proceeds that will be received by each Selling Shareholder cannot
be guaranteed. Macquarie Shareholders will be able to obtain up-to-date information on the market price
of SYD Securities on ASX’s website at www.asx.com.au.
The Sale Facility Proceeds will be remitted to each Selling Shareholder (free of any brokerage costs or
stamp duty) by:
– direct credit to the nominated bank account as noted on the register of Macquarie Shares on the
Record Date; or
– where an account has not been provided, by cheque sent by mail to the Selling Shareholder’s
address as shown on the register of Macquarie Shares as at the Record Date.
The Sale Facility Proceeds will be paid to Selling Shareholders in Australian dollars within 10 business
days of the date that all SYD Securities the subject of the Sale Facility are sold.
Macquarie expects to remit the Sale Facility Proceeds to Selling Shareholders by 3 March 2014. Selling
Shareholders will not receive any interest on the Sale Facility Proceeds.
At the same time as SYD Securities are sold under the Sale Facility, or prior thereto, Macquarie may also
be involved in selling other SYD Securities. For example, additional SYD Securities will be received
through MEREP that must be sold and Macquarie may dispose of residual holdings of SYD Securities
that do not form part of the Distribution. Additionally, Macquarie may also trade SYD Securities as part of
its normal business activities.
6.3 Information on the Consolidation
The Consolidation Resolution, if passed, would constitute the approval of Macquarie Shareholders under
section 254H of the Corporations Act to the conversion of all Macquarie Shares into a smaller number of
shares on a 0.9438 for one basis (with any resultant fraction rounded up on a per registered shareholder
basis). The Consolidation will take effect immediately after the Record Date.
The Consolidation ratio was determined by reference to the amount of the estimated Capital Return as a
proportion of the Macquarie Share price. The calculations were performed using the average of the
26
VWAPs for the 20 trading days up to and including 30 October 2013 (“20 day average VWAP”). The 20
day average VWAP for SYD Securities was $4.0341, implying a Capital Return of $2.7835. The 20 day
average VWAP for Macquarie Shares was $49.5259 so that the estimated return of capital is 5.6 per
cent of the value of Macquarie Shares. Accordingly, the Consolidation ratio has been set at 0.9438
shares for one.
The actual share prices at the time that Macquarie Shares commence trading on an ex-Distribution and
consolidated basis (expected to be 16 December 2013) are likely to vary from the prices used for this
calculation but the Consolidation ratio will not change. Similarly, the actual Closing Price (and hence the
actual amount of the Capital Return) and the proceeds delivered from the Sale Facility are also likely to
differ from these prices.
For the avoidance of doubt, the entitlement to participate in the Distribution will be calculated based on
Macquarie’s pre-Consolidation ordinary shares on issue.
Where the Directors form the opinion that shareholdings have been split or aggregated to obtain the
benefit of rounding, transfers of shares and aggregated parcels of shares may be disregarded for the
purpose of rounding.
The Board recommends that the proposed Consolidation be approved.
In accordance with section 254H of the Corporations Act, the Consolidation Resolution must be
approved by a simple majority of votes cast by or on behalf of the Macquarie Shareholders on the
resolution in order to be passed.
The Consolidation Resolution is conditional on both the Constitution Amendment Resolution and the
Capital Return Resolution being approved by Macquarie Shareholders. If either of the Constitution
Amendment Resolution or the Capital Return Resolution is not approved by Macquarie Shareholders, the
Consolidation Resolution will not be effective.
See the notes to the Notice of General Meeting in relation to how to vote on the Consolidation
Resolution.
If the Consolidation Resolution is passed and the conditions to its implementation are satisfied, then the
Consolidation will be implemented and binding upon all Macquarie Shareholders, regardless of how (or if)
they vote on the resolution.
27
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
6.4 Information on the Constitution Amendment
The Constitution Amendment Resolution, if passed, will constitute the approval of Macquarie’s
Shareholders under section 136(2) of the Corporations Act to the modification of the Constitution.
The existing Constitution allows for the declaration of in specie dividends. The purpose of the
Constitution Amendment Resolution is to extend and expand the ancillary powers that are available to
implement in specie dividends and to address reductions of capital. This will facilitate the Distribution and
provide greater flexibility for the payment of distributions in the future. It is proposed to replace existing
articles 15.6 and 15.7 of the Constitution with the revised articles 15.6 and 15.7, which are set out in full
in the Schedule to this Explanatory Memorandum.
In summary, the revised articles 15.6 and 15.7 provide:
– that the Directors may resolve that a distribution by reduction of capital, buy-back or other
distribution can be satisfied by an in specie distribution of shares, debentures or other securities in
Macquarie or in another body corporate or trust;
– in relation to any decision to pay a dividend, or to return capital by a reduction of capital, a buy-back
or otherwise, the Directors may:
– settle any difficulty that arises as they think expedient including withholding assets, cash, shares,
debentures or other securities required to make a payment to a government or taxing authority or
aggregating parcels of shares where shareholdings have been split or aggregated to obtain a
benefit from rounding of fractions of shares;
– fix the value for distribution of specific assets;
– pay cash or issue shares, debentures or other securities in order to adjust rights of members;
– vest assets in a trustee on trust; or
– authorise any person to make an agreement with Macquarie on behalf of members for the
purpose of a dividend or return of capital; or
– that the Directors may make a cash payment to a member instead of a distribution of assets, or
allocate the assets to a trustee for sale, if the distribution would be illegal or unlawful, would give rise
to a parcel that is not a marketable parcel or the Directors in their discretion determine that the
distribution would be impractical, or if the member so agrees.
The Directors recommend that the proposed Constitution Amendment be approved. The Constitution
Amendment Resolution will be considered by Macquarie Shareholders at the General Meeting as the first
item of business. In accordance with section 136(2) of the Corporations Act, the Constitution
Amendment Resolution must be approved by a special resolution requiring 75 per cent of the votes cast
by or on behalf of Macquarie Shareholders on the resolution, in order to be passed.
See the notes to the Notice of General Meeting in relation to how to vote on the Constitution Amendment
Resolution.
If the Constitution Amendment Resolution is passed then the Constitution Amendment will be
implemented and binding upon all Macquarie Shareholders, regardless of how (or if) they vote on the
resolution.
A copy of the Constitution is available at Macquarie’s website at www.macquarie.com.au/mgl/au/aboutmacquarie-group/profile/corporate-governance or you may telephone +612 8237 7968 for a hard copy
to be mailed to you.
6.5 ASIC modifications
ASIC has provided an in-principle exemption from certain requirements that Macquarie may otherwise be
required to comply with in order to operate the Sale Facility, including:
a) Section 601ED of the Corporations Act in relation to the Sale Facility;
b) Divisions 2 to 5 of Part 7.9 of the Corporations Act in relation to an interest in the Sale Facility; and
c) The requirement to hold an Australian financial services licence for the provision of the following
financial services:
i) dealing in an interest in the Sale Facility; and
ii) the provision of general advice in relation to an interest in the Sale Facility.
28
ASIC has also provided an in-principle confirmation that Macquarie does not have to comply with
Division 5A of Part 7.9 of the Corporations Act to the extent that Macquarie invites a person to make an
offer to sell SYD Securities through the Sale Facility.
6.6 Information for Macquarie Shareholders in jurisdictions outside Australia
Macquarie expects that in addition to Macquarie Shareholders with an Australian registered address,
registered and beneficial holders of Macquarie Shares in the following jurisdictions outside Australia will
not be considered Ineligible Shareholders (i.e. will be eligible to receive SYD Securities):
– Canada
– China
– Hong Kong
– Japan
– New Zealand
– Norway
– Singapore
– Luxembourg, Germany and the United Kingdom, provided that Macquarie is satisfied that the
Distribution will take place in accordance with one of the following:
– to legal entities that are authorised or regulated to operate in the financial markets or, if not so
authorised or regulated, whose corporate purpose is solely to invest in securities;
– to any legal entity that meets two of the following three requirements: (i) balance sheet total of
EUR 20,000,000; (ii) net turnover of EUR 40,000,000; (iii) own funds of EUR 2,000,000;
– to fewer than 150 natural or legal persons (other than qualified investors as defined in the
Prospectus Directive (Directive 2003/71/EC as amended)) in any member state of the European
Union; or
– in The Netherlands, provided that Macquarie is satisfied that the relevant person is:
– a legal entity which is authorised or regulated to operate in the financial markets or, if not so
authorised or regulated, whose corporate purpose is solely to invest in securities; or
– a legal entity that meets two of the following three requirements: (i) own funds of EUR 2,000,000;
(ii) balance sheet total of EUR 20,000,000; or (iii) annual net turnover of EUR 40,000,000, as
shown in its last annual or consolidated accounts.
– United States, provided that Macquarie is satisfied that the relevant person is:
– a “qualified institutional buyer” as defined in Rule 144A under the U.S. Securities Act of 1933, as
amended (“Securities Act”); or
– an “accredited investor” within the meaning of Rule 501 under the Securities Act.
6.7 Foreign legal restrictions
This Explanatory Memorandum has been prepared to comply with Australian law and is only being made
available to Macquarie Shareholders.
No action has been taken by Macquarie to register the SYD Securities to be transferred pursuant to the
Distribution in any jurisdiction outside Australia.
The distribution of this Explanatory Memorandum outside Australia may be restricted by law. This
Explanatory Memorandum should not be distributed to anyone other than Macquarie Shareholders, other
than by any Macquarie Shareholder in receipt of this Explanatory Memorandum who holds Macquarie
Shares on behalf of a beneficial owner and provides the Explanatory Memorandum to such beneficial
owner, provided that sending this Explanatory Memorandum to the beneficial owner does not constitute
a breach of applicable securities laws.
Failure to comply with such restrictions may find you in violation of applicable securities laws. If you come
into possession of this Explanatory Memorandum you should observe the restrictions set out in this
section.
This Explanatory Memorandum has been prepared having regard to Australian disclosure requirements.
These requirements may be different from those in other jurisdictions.
29
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
Canada
Upon receipt of this Explanatory Memorandum, each Canadian Macquarie Shareholder hereby confirms
that it has expressly requested that all documents relating in any way to the transactions contemplated in
this Explanatory Memorandum (including for greater certainty any notice or any form of proxy or election)
be drawn up in the English language only. Par la réception de cette note explicative, chaque actionnaire
canadien de Macquarie confirme par les présentes qu’il a expressément exigé que tous les documents
se rapportant de quelque manière que ce soit aux transactions envisagées dans cette note explicative
(incluant, pour plus de certitude, tout avis ou tout formulaire de procuration ou de choix) soient rédigés
en anglais seulement.
The distribution of the SYD Securities in Canada is being made on a private placement basis only and is
exempt from the prospectus requirements. Accordingly, any resale of the SYD Securities must be made
in accordance with applicable Canadian securities laws which may require resales to be made in
accordance with prospectus and dealer registration requirements or exemptions from the prospectus
and dealer registration requirements. Canadian Macquarie Shareholders are advised to seek legal advice
prior to any resale of the SYD Securities. SYD is not a “reporting issuer”, as such term is defined under
applicable Canadian securities laws, in any province or territory of Canada. Canadian Macquarie
Shareholders are advised that SYD and Macquarie are not required to file a prospectus or similar
document with any securities regulatory authority in Canada qualifying the resale of the SYD Securities to
the public in any province or territory of Canada and have no intent to do so.
China
The information set out in this Explanatory Memorandum does not constitute investment advice on
whether individual Chinese resident Macquarie Shareholders are allowed by their jurisdiction to acquire
any security or product traded on ASX and does not take into account their specific financial, investment,
taxation or other circumstances. Individual Macquarie Shareholders should consult their own advisers
before making any decision.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the
Prospectus Directive (Directive 2003/71/EC as amended) (each a “relevant member state”), no SYD
Securities have been distributed or will be distributed pursuant to the Proposal to the public in that
relevant member state prior to the publication of a prospectus in relation to the SYD Securities which has
been approved by the competent authority in that relevant member state or, where appropriate,
approved in another relevant member state and notified to the competent authority in the relevant
member state, all in accordance with the Prospectus Directive, except that a distribution of SYD
Securities may be made to the public in that relevant member state at any time:
– to legal entities which are authorised or regulated to operate in the financial markets or, if not so
authorised or regulated, whose corporate purpose is solely to invest in securities;
– to any legal entity which meets two of the following three requirements: (i) balance sheet total of EUR
20,000,000; (ii) net turnover of EUR 40,000,000; (iii) own funds of EUR 2,000,000;
– to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus
Directive) in any member state of the European Union; or
– in any other circumstances which do not require the publication by Macquarie of a prospectus
pursuant to Article 3(2) of the Prospectus Directive,
provided that no such offer of SYD Securities shall result in a requirement for the publication of a
prospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing the
Prospectus Directive in a relevant member state.
Hong Kong
This Explanatory Memorandum is provided only for the personal and confidential use of its intended
recipient. If you are not the intended recipient of this Explanatory Memorandum, you are hereby notified
that any review, dissemination, distribution or copying of this Explanatory Memorandum is strictly
prohibited.
30
This Explanatory Memorandum is not a prospectus within the meaning of the Companies Ordinance
(Chapter 32, The Laws of Hong Kong) (“CO”) nor is it an offer or invitation to the public within the
meaning of the CO and the Securities and Futures Ordinance (Chapter 571, The Laws of Hong Kong)
(“SFO”), or an advertisement, invitation or document subject to section 103(1) of the SFO.
This Explanatory Memorandum and the contents within have not been authorised by the Hong Kong
Securities and Futures Commission and no invitation, advertisement or other document relating to the
SYD Securities, whether in Hong Kong or elsewhere, has been or will be issued, which is directed at, or
the contents of which are likely to be accessed or read by the public in Hong Kong within the meaning of
the CO and the SFO (except if permitted to do so under the laws of Hong Kong).
This Explanatory Memorandum must not be distributed, published or reproduced (in whole or in part),
disclosed by or to any other person in Hong Kong or to any person to whom the disclosure of this
Explanatory Memorandum would be a breach of the CO or the SFO. You are advised to exercise caution
in relation to this Explanatory Memorandum. If you are in any doubt about any of the contents of this
Explanatory Memorandum, you should obtain independent professional advice.
Singapore
Nothing is this Explanatory Memorandum constitutes an offer of securities, units in a business trust or
derivatives of units in a business trust or units in a collective investment scheme as defined under Part
XIII of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA") and accordingly, this
Explanatory Memorandum has not been and will not be registered as a prospectus with the Monetary
Authority of Singapore. Accordingly, any offer or transaction in relation to the SYD Securities may only be
made and any document in connection with such offer or transaction may only be distributed (a) in
circumstances where the SFA does not apply, (b) pursuant to, and in accordance with the conditions of,
an applicable exemption under the SFA, or (c) if a prospectus is registered pursuant to the SFA.
United States
Subject to certain exceptions for certain investors that satisfy the definition of “qualified institutional
buyer” in Rule 144A under the U.S. Securities Act of 1933 (the “U.S. Securities Act”), or “accredited
investor” in Rule 501 under the U.S. Securities Act (each as determined in Macquarie’s sole discretion),
the SYD Securities will not be distributed to Macquarie Shareholders in the United States. The SYD
Securities have not been, and will not be, registered under the U.S. Securities Act or the securities laws
of any state of the United States, and may not be offered or sold in the United States or to persons
acting for the account or benefit of persons in the United States, except in a transaction exempt from, or
not subject to, registration under the U.S. Securities Act and applicable state securities laws in the United
States. Accordingly, except as described above, Macquarie Shareholders in the United States or who
are acting for the account or benefit of persons in the United States will be Ineligible Shareholders.
6.8 Provision of Macquarie Shareholder information to SYD and Nominee
Relevant Macquarie Shareholder information will be provided to SYD’s Security Registry or to the
Nominee, as applicable, to enable registration of the holdings, including holder name, address, email
address and number of securities. Other shareholding information will not be provided. In particular,
legislation prevents the provision of Macquarie Shareholder TFNs to SYD’s Security Registry or to the
Nominee.
31
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
GLOSSARY
ABN means Australian Business Number.
AEDT means Australian Eastern Daylight Time.
ASIC means the Australian Securities and Investments Commission.
APRA means the Australian Prudential Regulation Authority.
ASX means ASX Limited (ACN 008 624 691) or the Australian Securities Exchange as appropriate.
ATO means the Australian Taxation Office.
Capital Return means the equal capital reduction per Macquarie Share equal to 69 per cent of the
Closing Price, payment of that capital reduction and the Special Dividend to be satisfied by the
Distribution.
Capital Return Resolution means the second resolution in the Notice of General Meeting.
Class Ruling means the ATO class ruling in respect of the Australian income tax consequences of the
Distribution for Macquarie Shareholders as described in section 5.1
Closing Price means the closing price of SYD Securities on ASX on the Trading Day prior to the
Distribution Date.
Consolidation means the consolidation of Macquarie Shares on a 0.9438 for one basis.
Consolidation Resolution means the third resolution in the Notice of General Meeting.
Constitution means the constitution of Macquarie.
Constitution Amendment means the amendment to the Constitution set out in the Schedule to this
Explanatory Memorandum.
Constitution Amendment Resolution means the first resolution in the Notice of General Meeting.
Corporations Act means the Corporations Act 2001 (Cth).
Directors means the Voting Directors of Macquarie as defined in the Constitution.
Distribution means the distribution of SYD Securities to Macquarie Shareholders on a one for one basis
implemented through the Capital Return and the Special Dividend.
Distribution Date means 13 January 2014 or such other date the Directors determine for the
Distribution to be made.
Election Date means the last date for receipt of Sale Facility Election Forms to participate in the Sale
Facility, expected to be 6 January 2014.
Eligible Macquarie Shareholder means a Macquarie Shareholder on the Record Date other than an
Ineligible Shareholder.
Eligible Sale Facility Shareholder means a Macquarie Shareholder who holds 500 or fewer Macquarie
Shares on the Record Date, other than a Macquarie Shareholder whose address is in or who is a citizen
or resident of or who Macquarie believes may be a citizen or resident of a country in which Macquarie
determines it is unlawful or impractical to operate the Sale Facility.
Ex-Distribution Date means the day on which Macquarie Shares commence trading without an
entitlement to the Distribution, expected to be 16 December 2013.
Executive Key Management Personnel means the members of the Executive Committee of
Macquarie.
Explanatory Memorandum means this explanatory statement in respect of the General Meeting.
General Meeting means the general meeting of Macquarie Shareholders to be convened on
12 December 2013 (subject to any adjournment) to consider the Proposal.
32
GST has the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999 (Cth).
Holder Election Form means the form accompanying this Explanatory Memorandum, or the electronic
version of the Holder Election Form that may be accessed online at
www.investorvote.com.au/mqgholderelection, that contains instructions from Eligible Macquarie
Shareholders to have the SYD Securities to which they are entitled registered in their name.
IFRS means International Financial Reporting Standards.
Ineligible Shareholder means a Macquarie Shareholder on the Record Date whose address is shown
on the Macquarie share register, or who is a trustee or custodian for a beneficial owner of Macquarie
Shares (in whole or part), whose address is in, or who is a citizen or resident or who Macquarie otherwise
believes may be a citizen or resident of a country, outside Australia and its external territories, unless
Macquarie is satisfied that the laws of the applicable overseas jurisdiction permit the transfer of SYD
Securities to that person pursuant to the Distribution.
Listing Rules means the ASX Listing Rules.
Macquarie means Macquarie Group Limited (ACN 122 169 279).
Macquarie Group means Macquarie and its controlled entities.
Macquarie Shares means ordinary shares in the issued capital of Macquarie.
Macquarie Shareholders means the holders of Macquarie Shares.
Macquarie Share Registry means Computershare Investor Services Pty Limited.
MEREP means Macquarie Group Employee Retained Equity Plan.
MEREP Trustee means the trustee of the MEREP trust.
Nominee means the person appointed to act as Nominee under the Nominee Arrangements.
Nominee Arrangements means the terms on which the Nominee will hold SYD Securities transferred to
it on behalf of the Macquarie Shareholders who do not return completed Holder Election Forms by the
Election Date.
Notice of General Meeting means the notice of general meeting attached to this Explanatory
Memorandum.
Proposal means the Constitution Amendment, the Distribution and the Consolidation.
Record Date means 7:00 pm AEDT on 20 December 2013 or such other date as the Directors specify
as the record date for the Distribution.
SAHL means Sydney Airport Holdings Limited (ACN 075 295 760) (AFSL 236 875).
Sale Agent means the broker appointed by Macquarie to sell the SYD Securities under the Sale Facility.
Sale Facility means the sale facility described in section 6.2.
Sale Facility Election Form means the form for participation in the Sale Facility provided to Eligible Sale
Facility Shareholders or the electronic version of the Sale Facility Form that may be accessed online at
www.investorcentre.com.au/mqgsalefacility.
Sale Facility Proceeds means the amount to be received by each Selling Shareholder pursuant to the
Sale Facility as described in section 6.2.
Sale Period means the period during which SYD Securities are sold under the Sale Facility and as
described in section 6.2.
SAT1 means Sydney Airport Trust 1 (ARSN 099 597 921).
SAT2 means Sydney Airport Trust 2 (ARSN 099 597 896).
33
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Explanatory Memorandum
continued
Selling Shareholder means an Eligible Sale Facility shareholder who lodges a Sale Facility Election Form
before the time set out in section 6.2. and each Ineligible Shareholder.
Special Dividend means the dividend per Macquarie Share of an amount equal to the Closing Price less
the amount of the Capital Return per Macquarie Share, payment of that dividend and the Capital Return
to be satisfied by the Distribution.
SYD means ASX listed Sydney Airport, which currently comprises the stapled units of SAT1 and SAT2.
SYD Securities means the fully paid stapled securities of SAT1 and SAT2; or, if the SYD Simplification
Proposal described in section 4.1 is completed, the resulting stapled securities of SYD.
SYD Securityholder means the holders of SYD Securities.
SYD Simplification Proposal means the proposal as described in section 4.1.
Tax Act means collectively the Income Tax Assessment Act 1936 (Cth) and the Income Tax Assessment
Act 1997 (Cth).
TFN means Australian Tax File Number.
TFN Withholding means Tax File Number withholding tax as described in section 5.
Trading Day means a day which is a trading day within the meaning of the ASX Listing Rules.
United States means the United States of America, its territories and possessions, any State of the
United States and the District of Columbia.
VWAP means volume weighted average sale price of securities sold on ASX on a day excluding any
special crossings and similar transactions.
34
Schedule
Proposed new Articles 15.6 and 15.7 of the Constitution
15.6 Distribution of specific assets
When resolving to pay a dividend or to return capital by a reduction of capital, a buy-back or otherwise, the
Voting Directors may:
a) resolve that the dividend or return of capital be satisfied either wholly or partly by the distribution of
specific assets to some or all of the persons entitled to the dividend or return of capital, including
without limitation shares, debentures or other securities of the Company or any other body corporate or
trust; and
b) direct that the dividend or return of capital payable in respect of any particular shares be satisfied wholly
or partly by such distribution and that the dividend or return of capital payable in respect of other shares
be paid in cash.
15.7 Ancillary powers regarding distributions
a) In relation to any decision to pay a dividend or to return capital by a reduction of capital, a buy-back or
otherwise, the Voting Directors may:
i) settle any difficulty that arises in making the distribution as they think expedient and, in particular,
make cash payments in cases where Members are entitled to fractions of shares, debentures or
other securities and decide that amounts or fractions of less than a particular value decided by the
Voting Directors may be disregarded in order to adjust the rights of all parties by withholding
assets, cash, shares, debentures or other securities where the Company is required to make a
payment in respect of the Member to a government or taxing authority in relation to the distribution
or issue and decide to make distributions by disregarding transfers of shares or aggregating
parcels of shares where they form the opinion that shareholdings have been split or aggregated to
obtain the benefit of rounding on fractions of shares;
ii) fix the value for distribution of any specific assets;
iii) pay cash or issue shares, debentures or other securities to any Member in order to adjust the rights
of all parties;
iv) vest any of those specific assets, cash, shares, debentures or other securities in a trustee or
nominee on trust for the persons entitled to the distribution or capitalised amount on such terms
that seem expedient to the Voting Directors; and
v) authorise any person to make, on behalf of the Members or a particular Member entitled to any
specific assets, cash, shares, debentures or other securities as a result of the decision, an
agreement (including an agreement in writing) with the Company or another person which provides,
as appropriate, for the distribution or issue to them of the assets, cash, shares, debentures or other
securities and by applying to them their respective proportions of the amount resolved to be
distributed.
b) Any agreement made under an authority referred to in article 15.7(a)(v) is effective and binds all
Members concerned.
c) Instead of making a distribution or issue of specific assets, shares, debentures or other securities to a
particular Member, the Voting Directors may make a cash payment to that Member or allocate some or
all of the assets, shares, debentures or other securities to a trustee to be sold on behalf of, and for the
benefit of, or in respect of, that Member, if:
i) the distribution or issue would otherwise be illegal or unlawful;
ii) the distribution or issue would give rise to parcels of securities which do not constitute a marketable
parcel;
iii) in the Voting Directors’ discretion, the distribution or issue would, for any reason, be impracticable; or
iv) the Member so agrees.
d) If the Company distributes to Members (either generally or to specific Members) shares, debentures or
securities of the Company or another body corporate or trust (whether as a dividend or return of capital
or otherwise and whether or not for value), each of those Members appoints the Company and any
officer of the Company nominated in that behalf by the Voting Directors as his or her agent or attorney
to do anything needed or desirable to give effect or assist in giving effect to that distribution, including
without limitation agreeing to become a member, holder of shares, holder of debentures or holder of
securities of the Company or that other body corporate or trust.
35
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Notice of General Meeting
Notice of General Meeting
A General Meeting of Macquarie Group Limited (ACN 122 169 279) (Macquarie) will be held in the
Conference Room, Level 1, 1 Shelley Street, Sydney, New South Wales on Thursday, 12 December
2013, at 2.30 pm. Registration will commence at 1.30 pm.
Items of Business
1
Approval of Constitution Amendment Resolution
To consider and, if thought fit, pass the following as a special resolution:
That the Constitution of Macquarie Group Limited is amended by substituting articles 15.6 and 15.7 in
the Schedule to the Explanatory Memorandum dated 1 November 2013 for the existing articles 15.6 and
15.7 of the Constitution, such amendment to take immediate effect.
2
Approval of Capital Return Resolution
To consider and, if thought fit, pass the following as an ordinary resolution:
That subject to and conditional upon the passing of the Constitution Amendment Resolution, for the
purposes of Part 2J.1 of the Corporations Act 2001 (Cth), and for all other purposes, approval is given
for the share capital of Macquarie to be reduced by an amount per Macquarie Share equal to
69 per cent of the Closing Price, payment of such reduction of capital and the Special Dividend as
resolved by the Board to be satisfied by:
a) Macquarie transferring on the Distribution Date to each registered holder of Macquarie Shares on the
Record Date or to the Nominee on their behalf (as described in the Explanatory Memorandum), one
SYD Security for every one Macquarie Share held by that holder as at the Record Date; and
b) in the case of each Eligible Sale Facility Shareholder who elects to participate in the Sale Facility and
each Ineligible Shareholder, Macquarie transferring to the Sale Agent, the SYD Securities that the
Macquarie Shareholder is entitled to pursuant to paragraph (a) for sale pursuant to the Sale Facility.
3
Approval of Consolidation Resolution
To consider and, if thought fit, pass the following as an ordinary resolution:
That subject to and conditional upon the passing of the Constitution Amendment Resolution and the
Capital Return Resolution, with effect immediately after the Record Date, the share capital of Macquarie
will be consolidated through the conversion of every one Macquarie Share into 0.9438 Macquarie Shares
and that any resulting fractions of a share be rounded up to the next whole number of shares on a per
registered shareholder basis (and provided that where the Voting Directors form the opinion that
shareholdings have been split or aggregated to obtain the benefit of rounding, by disregarding transfers
of shares or aggregating parcels of shares for the purpose of rounding).
For further information, please refer to the attached Explanatory Memorandum. Terms having a defined
meaning in the glossary to the Explanatory Memorandum have a corresponding meaning in this Notice of
General Meeting.
By order of the Board
Dennis Leong
Company Secretary
Sydney
1 November 2013
36
Notes
1
Proxies
If you cannot attend, you may appoint a proxy to attend and vote for you. If you are entitled to cast two
or more votes, you may nominate two persons to vote on your behalf at the meeting. If two proxies are
appointed, each proxy may be appointed to represent a specified number or proportion of your votes.
Fractions of votes will be disregarded. If no such number or proportion is specified, each proxy may
exercise half your votes. For shareholders receiving the Notice of General Meeting by post, a proxy form
and a reply paid envelope have been included with this Notice of General Meeting. Proxy voting
instructions are provided on the proxy form.
A proxy need not be a shareholder. Votes may be cast ‘For’ or ‘Against’ or you may ‘Abstain’ from voting
on a resolution. If you wish to direct a proxy how to vote on any resolution, place a mark (e.g. a cross) in
the appropriate box on the proxy form and your votes may only be exercised in that manner. You may
split your voting direction by inserting the number of shares or percentage of shares that you wish to vote
in the appropriate box. If you place a mark in the ‘Abstain’ box, your votes will not be counted in
computing the required majority on a poll.
2
Online Proxy Facility
You may also submit your proxy appointment online at www.investorvote.com.au
To use this online proxy facility, you will need to enter your Securityholder Reference Number (SRN) or
Holder Identification Number (HIN), postcode and Control Number, as shown on your proxy form. You
will be taken to have signed the proxy form if you lodge it in accordance with the instructions on the
website. If you wish to use this facility, you must submit your proxy appointment through the facility by
no later than 2.30 pm (Sydney time) on Tuesday, 10 December 2013. A proxy cannot be appointed
online if they are appointed under a power of attorney or similar authority. The online proxy facility may
not be suitable for some shareholders who wish to split their votes on an item of business or appoint two
proxies with different voting directions. Please read the instructions for the online proxy facility carefully
before you submit your proxy appointment using this facility. If you are a Nominee and an Intermediary
Online subscriber, you can log on to www.intermediaryonline.com
3
Proxy Delivery
Proxies must be received by Macquarie’s Share Registry at GPO Box 1282, Melbourne, VIC, 3001
(facsimile number within Australia 1800 783 447 or from outside Australia +61 3 9473 2555) or at Level
4, 60 Carrington Street, Sydney, NSW, 2000 or at Macquarie’s registered office in Sydney, by no later
than 2.30 pm (Sydney time) on Tuesday, 10 December 2013. Any revocations of proxies (including
online proxy appointments) must be received at one of these places before the commencement of the
meeting, or at the registration desk at 1 Shelley Street for the General Meeting from 1.30 pm on the day
of the meeting and no later than the commencement of the meeting.
4
Power of Attorney
If a shareholder has appointed an attorney to attend and vote at the meeting, or if the proxy is signed by
an attorney, the power of attorney (or a certified copy of the power of attorney) must be received by
Macquarie’s Share Registry at the addresses or facsimile number in Note 3 above, or at Macquarie’s
registered office in Sydney, by no later than 2.30 pm (Sydney time) on Tuesday, 10 December 2013,
unless the power of attorney has been previously lodged with Macquarie’s Share Registry for notation.
37
Macquarie Group Limited
Explanatory Memorandum
macquarie.com.au
Notice of General Meeting
continued
5
Corporate Representatives
If a corporate shareholder wishes to appoint a person to act as its representative at the meeting, that
person should be provided with a letter or certificate authorising him or her as the company’s
representative (executed in accordance with the company’s constitution) or with a copy of the resolution
appointing the representative, certified by a secretary or director of the company. A form of appointment
of corporate representative may be obtained from Macquarie’s Share Registry.
6
Shareholders Eligible to Vote
Pursuant to regulation 7.11.37 of the Corporations Regulations 2001 (Cth), the holders of Macquarie
Shares for the purposes of the meeting, will be those registered holders of Macquarie Shares at 7.00 pm
(Sydney time) on Tuesday, 10 December 2013.
7
Voting at the Meeting
In light of the large number of proxy votes which have been received from shareholders at previous
meetings, it is intended that voting on each of the proposed resolutions at this meeting will be conducted
by poll, rather than on a show of hands.
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